Banks Lead Mini Rally on Wall Street; S&P Hits New '10 High

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Propped up by rallying bank stocks, Wall Street eked out slight gains on Wednesday, leaving the S&P 500 at territory unseen since the scary financial crisis in September 2008.

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Today's Markets

The Dow Jones Industrial Average rose 13.32 points, or 0.12%, to 11372.48, the Standard & Poor's 500 gained 4.53 points, 0.37%, to 1228.28 and the Nasdaq Composite jumped 10.67 points, or 0.41%, to 2609.16. The FOX 50 picked up 4.96 points, or 0.57%, to 880.54.

Wednesday marked the fourth consecutive day of the Dow closing less than 20 points away from where it opened. It’s no wonder Wall Street barely budged as traders had no major economic or earnings reports to use for guidance. That left most of the attention on the bond and currency markets, which were also relatively calm, and the tax negotiations in Washington.

Underscoring how lifeless the markets have been of late, the Dow has traded in a range of just 1.72% over the past five sessions, the tightest range since early November.

However, given last week's impressive 290-point rally on the Dow, the fact the blue chips have flatlined this week “can be construed as a net positive for the bulls,” said Michael James, managing director of equity trading at Wedbush Securities. “Without some significant negative macro news, it’s going to be hard for the market to pull back too much going into the end of the year.”

The S&P 500 closed at its highest point since September 19, 2008, just days before the implosion of Lehman Brothers set off the financial crisis. The mini rally comes after a near triple-digit rally on the benchmark index fizzled on Tuesday as enthusiasm for an apparent compromise to extend the Bush tax cuts for two years was offset by dollar strength and Democratic dissension on the tax cut deal.

Just over half of the Dow's 30 stocks closed with gains, led by financial-related companies Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and American Express (NYSE:AXP). The index's weakest links were Boeing (NYSE:BA) and McDonald's (NYSE:MCD), which was hurt by its November sales report.

The Nasdaq Composite outpaced the broader markets, landing at its best level since January 2, 2008. The index driven higher by tech stocks like Yahoo! (NASDAQ:YHOO) and Electronic Arts (NASDAQ:ERTS).

Financial stocks helped prop up the markets, with BofA, Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) all gaining more than 2% a piece. Regional banks like Fifth Third Bancorp (NASDAQ:FITB) and PNC (NYSE:PNC) saw even heavier buying.

The group appeared to benefit from US Bancorp (NYSE:USB), which told investors that fourth-quarter loan growth would double sequentially.

Wall Street was also helped by the relative calm in the bond and currency markets, as Treasuries pared earlier losses after a decent auction of $21 billion in 10-year notes. The bond sale came into focus as Treasuries hit six-month highs on Tuesday in the wake of the tax deal in Washington, which drove up forecasts for economic growth and the U.S. budget deficit.

The euro also traded at parity against the U.S. dollar, avoiding further declines despite continued concerns about the European sovereign debt currency.

Commodities ended off their worst levels of the day as well. After sinking more than $1, crude oil closed down just 41 cents a barrel, or 0.46% to $88.28. Gold declined $25.80 a troy ounce, or 1.83%, to $1,382.50.

Corporate Movers

American International Group (NYSE:AIG) inked a recapitalization plan with the Treasury Department in an effort to pay back U.S. taxpayers for its bailout. Reuters previously reported the giant insurer and the U.S. would offer a large stock sale in the first half of next year that could be worth more than $10 billion.

MasterCard (NYSE:MA) may be feeling the effects of pulling the plug on controversial WikiLeaks as the card giant’s corporate Web site has been dogged by technical glitches. Operation Payback, which warned it will "find" and "attack those who stand against WikiLeaks," took credit for the outage, listing MasterCard.com as its "current target."

Bank of America’s (NYSE:BAC) legal “war room” aimed at protecting itself from a potential WikiLeaks document dump is focusing on BofA’s Countrywide arm and conversations between former CEO Ken Lewis and ex-Treasury Secretary Henry Paulson, FOX Business’s Charles Gasparino reported.

McDonald’s (NYSE:MCD) slumped 2% after saying its same-store sales rose 4.8% globally in November. Analysts had been expecting growth of 5.6%. U.S. and European same-store sales climbed 4.9%, but its Asia/Pacific, Middle East and Africa segment saw sales increase just 2.4%.

Fortune Brands (NYSE:FO) unveiled plans to split itself apart, spinning off or selling its golf and home products units. The maker of Jim Beam bourbon could eventually sell its spirits business, which is ranked as the world’s fourth-biggest.

Men’s Wearhouse (NYSE:MW) slumped 17% a day after the specialty retailer projected a non-GAAP loss of 19 cents to 22 cents for the current quarter. Analysts had been calling for a loss of just 5 cents a share. The outlook overshadowed its stronger-than-expected EPS of 57 cents and 19% increase in sales for the third quarter.

Home Depot (NYSE:HD) hiked its 2010 outlook, projecting 2.3% sales growth and EPS of $1.97. Analysts had been calling for EPS of $1.94. For 2011, Home Depot sees EPS growing 7% to 9% and sales to climb 2% to 2.5%.

Global Markets

The U.K.'s FTSE 100 fell 0.24% to 5794.53, France's CAC 40 advanced 0.56% to 3831.98 and Germany's DAX declined 0.37% to 6975.87.

In Asia, Tokyo's Nikkei 225 jumped 0.90% to 10232.30, Hong Kong's Hang Seng dropped 1.43% to 23092.50 and China's Shanghai Composite sold off 0.95% to 2848.55.

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